Backed by
Beijing, deep-pocketed, globe-trotting Chinese venture capitalists are buying
up U.S. companies to power China's emerging clean-tech revolution--and getting
very rich in the process. How American technology is scaling up on the other
side of the pacific.

QUOTES IN THE ARTICLE

Living in a
Middle Zone

If there's an elderstatesman of Chinese clean-energy
venture-capital investing, Ye, the 51-year-old founding partner of the Beijing
firm Tsing Capital, is it. His first fund, which he struggled to raise in 2002,
when he was just 38, had $13 million. The fund he closed in 2012 had $282
million. His investors have included some of the biggest names in global
finance: multinationals such as BP, BASF, ABB, and Mitsui; development
institutions such as the World Bank's International Finance Corp.; European
pension and sovereign-wealth funds; and family offices, including that of Eric
Xu, co-founder of Chinese web-search engine Baidu. In his Beijing office, in a
room with a massive tea set where Ye receives visitors, a credenza holds photos
of Ye with an array of luminaries, including Al Gore.

Now Ye is raising a fifth fund, for which he's targeting
$350 million. The money is chasing fixes for China's monumental environmental
ills, and Ye and his partners plan to invest much of it in Western tech
companies, particularly those from the U.S. that they hope to scale up in
China. "China's environment now has cancer," Ye says. "But China
has lots of cash."

The venture business has been good to Ye. As he decried
China's polluted air and rivers, he was sitting under a gorgeous blue sky,
sipping tea by the backyard pool of his vacation home in Woodside, Calif. The
house has a clear view of San Francisco Bay, solar panels on the roof, and a
Mercedes SUV that retails for $90,000 sitting in the garage alongside a Chevy
Volt. Strung between trees in the backyard were multicolored flags, each with a
different sutra, or aphorism in Buddhism, the religion that Ye took up a few
years ago. Ye has a Buddhist master from Tibet as a personal teacher, and one
morning as he and I speak by the pool, the guru sits at the kitchen table,
quietly eating breakfast. Earlier in the year Ye had hosted a July Fourth
fireworks-watching party; he plans to make it an annual tradition.

Ye always seems to be in a middle zone between China and
the U.S. "Hello?" he says by the pool at one point, answering one of
the two mobile phones sitting on a table beside his tea cup. "I mean,
Wei?" he adds, proffering the traditional Mandarin phone greeting once he
realizes the caller is Chinese. The call is about a Silicon Valley investment
of Ye's that's proving difficult: Atieva, a company racing to develop a luxury
electric car.

Atieva was founded in 2007 by Bernard Tse, an engineer
who the year before had left Tesla, where he was a vice president and board
member. From the start the company was focused on China, where government has
rolled out generous subsidies for electric cars. In 2009, Tsing Capital
invested $8 million in Atieva. The startup later raised additional money--with
help from Tsing--including a $200 million round that closed in 2014, with
virtually all the money coming from China. The biggest chunk, $100 million,
came from Beijing Automotive Industry Holding Co., or BAIC, a state-owned
company that's one of China's largest automakers.)

Ye invited me to visit Atieva to meet Tse, the CEO. But
when I got to the company's headquarters, a squat building in an industrial
section of Palo Alto, Tse didn't want to talk. A potential explanation for his
reticence emerged a few days later. Atieva's board met, and a session scheduled
to take two hours lasted many more because of friction about the company's
direction, reported Ye. Atieva and several of its investors regard themselves
as competing against one another to get an electric car onto the road. They
are, Ye says, "all in the same pot."

A couple of weeks later, I headed to China. In Beijing, I
went with Ye to BAIC's headquarters, a building designed by a German architect
that's clad in metal and looks like a ship, with halls as long and shiny as
bowling lanes. Sitting alone in an office, I could hear people approaching,
because their rubber-soled shoes padding against the floor made an ever louder
"swish, swish."

The BAIC investment in Atieva envisions a joint venture
in which BAIC will open a factory in China to build Atieva cars. BAIC already
makes its own electric vehicles; it sold 5,510 of them in 2014, a tiny fraction
of its total sales of 2.4 million passenger vehicles. But BAIC has plans to
boost electric-vehicle production. Part of its strategy is to build an Atieva
car that's faster, lighter, more luxurious, and able to go farther on a charge.
The goal, I was told, is for Atieva's car to compete against Tesla's Model S.